Hello: If there is no other steel in the system, rust has to be coming from the heater. If the red stuff is attracted to a magnet, you’ll know for certain that it’s iron based. I think I’d have a look at the anode rod in the tank. If it’s gone, that’s why you’re getting rust. Then look in the combustion chamber if it’s a gas heater and around at fittings to make sure it’s a candidate for maintaining. (there is info on this site for how to check out a heater) If so, replace the anode and relief valve at a minimum. If you install flushing parts, keeping sediment at bay will be easier too.
ps. Do you have a recirculation line?